Urban Survival’s Inside Report # 11 December 29, 2001
NOTICE: All contents © 2001, George A. Ure, except other authors as noted. This document is intended for the sole use of subscribers and may not be transmitted, reproduced, or in other way used without the prior express consent of the author. This publication is by subscription: $30/year for web browser accessed delivery to a password protected site (price effective until January 1, 2002), and $100/year if delivered by U.S. mail within the U.S. and Canada. Overseas subscriptions are US$ 250/year which includes postage. To subscribe, send a check to: George A. Ure, 2726 Shelter Island Drive, #322, San Diego, CA 92106. Your username and password are both your email address, in all lower case to access the protected web site, so don't forget to include it! Address comments and correspondence to: george@ure.net. Read the disclaimer: http://www.urbansurvival.com/disclaim.htm This report is based on sources believed reliable and makes no specific investment advice. Before you invest in anything, seek professional advice and remember, you can only spend it once!
S - Curves : Exit Clues?
If you have some time to spend reading, and you want to look at a different way of perceiving the world, do a little research on the subject of S-curves and how they can be used as a forecasting tool. I've written about the topic a bit, and this week, thanks to unemployment, I've had a few minutes to do a little tinkering with the notion and here's the low down on the technique...I don't think you'll see much anywhere else on the web because I've looked, and about the closest thing seems to be dynamic Gann lines, but this is different than that because Gann doesn't consciously consider market saturation. S-curves do. Let me tell you what little I know.
Limits to Growth
The notion of S-curves is best illustrated by considering a dish full of agar (the goo that bacteria go to town on). Now for the sake of the example, we're going to use extremely large bacteria...monsters that are so big we can only get 174 into our Petri dish. OK, unrealistic, so many this is a nano-engineered dish. The point is the bacteria grow like crazy until the dish is about half covered with bacteria, and then it slows down. Eventually, all of the space is occupied and the growth rate goes to zero. All niches for bacteria are filled and the market is saturated.
As you will see in the following example, when we consider the stock market as we consider individual bacteria counts, we visualize a rising market or rising bacteria count which reaches its zenith increasing 64 bacteria in a single day. But then the market goes down. It's like a series of up days and then down days. The problem is that knowing rather precisely what the market is doing right now doesn't give us much perspective on where it is going tomorrow. Here's our basic data:
| Time | Bacteria | Cumulative Bacteria Count |
| 0 | 1 | 1 |
| 1 | 2 | 3 (1+2) |
| 2 | 4 | 7 (3+4) |
| 3 | 16 | 23 (7+16) |
| 4 | 32 | 55 (23+32) |
| 5 | 64 | 119 (55+64) |
| 6 | 32 | 151 (119+32) |
| 7 | 16 | 167 (151+16) |
| 8 | 4 | 171 (167+4) |
| 9 | 2 | 173 (171+2) |
| 10 | 1 | 174 (173+1) |
Now you'll see that I have taken the "daily close" number of bateria and made the right column which is the running total of all the bacteria. I take the cumulative total and and plot out the numbers over time. What we get is what Cesare Marchetti and his buddies at CERN call the "S" curve.
The interesting thing about S-curve analysis is that it is incredibly simple, doesn't require more than basic spreadsheet skills, and it seems to yield some information from the numbers that isn't as apparent, with the lone caveat that it works well for systems that will (at some point) reach a saturation level.
So how can we pick an exit point, based on the data and in a reasonably objective manner? Well, its simple enough: We simply draw a series of lines each time the slope of the curve becomes more vertical. As long as the market is growing on a cumulative basis at an ever increasing rate, we stay in. But as soon as the S-curve line begins to rotate clockwise, returning to a more horizontal slope, we know it is time to exit our investment in bacteria.
By carefully tending our chart, we would have exited as soon as the line looked like it was going negative (heading to an intersection with the red line). Using this method we would have pulled out before hitting our sixth data point (between cumulative 121 and cumulative 153).
As Marchetti and friends have shown, this type of analysis works very well because when you come down to it, just about all systems here in the physical world are limited. In their writings, they even went so far as to show how one technology replaces another. If you picture the development of trains as the blue S-curve and the development of autos as the red S-curve, then it becomes clear that trains were passing into history even as the first autos were coming out in the early 1920's. Sure enough, from about the 1890's, the amount of rail track didn't go anywhere.
So that's the theory part of S-curves. You can get a little taste of it in some of Harry Dent's work, but as I noted in a post to the Longwave Economics group in early 2000, Dent "ain't the man" in this stuff:
Marchetti (CERN) in particular deserves way more credit than is afforded by
(the popularist) Dent. Sort of like stealing the ideal for a wheel IMHO.
Marchetti was dealing with the margin many years back - the logical limits
of growth as an S -curve constraint - something that finds little support among
denial based capitalists. http://csf.colorado.edu/forums/longwaves/jan00/msg00993.html
You can get into more of the math (if you would like) by clicking here:
http://207.201.172.9/content/eee00/futr3bie.htm.
Does It Work with Markets?
I will give you some charts to look at, and then I will leave you a spreadsheet that will work with Excel 97 and later, so you can tinker with some of the notions yourself.
First, we know that the NASDAQ has been a spectacular flame-out for almost two years. We also believe (at least I think you're with me) that the Internet won't keep growing forever at historical rates. At some point we run out of people to sign on. So let's begin with looking at the NASDAQ 100 (IXIC) and seeing how it would look when laid out in the S-curve format:
This chart shows the run-up in the IXIC from 1992 to present and the S-curve is pretty clear, isn't it? Now once we have the curve, we would simply keep drawing lines at progressively more "vertical" angles and when the market stops growing at the required rate, we ought to look for the exit. As this graph shows, the S-curve would have pulled us out in about May 2000 or August 2000 at the latest. The worst case application would have us out at 3500, and in a best case at 4200, either of which would look like a genius move when we are still under 2000 today.
Let's run the analysis now on a much shorter time scale; this year.
Now in this case, we drew two lines. a thin green one above the first angle of the year, and a thin red one under the more recent developments. In this case, there would have been an exit around 2027 this past summer, and then we would be looking at a possible entry in the October-November area, but this would be highly speculative.
Now let's go on to the Dow:
While not as obvious in this 1992-Present chart, the Dow has been diverging from the cumulative increases, and that could lead a person of little faith to be ready to exit the Dow components. But again, this is a lot term plot, hardly the stuff of day trades.
And the Dow, zoomed in and focused only on the past year looks like this:
Although the market is not presently breaking down toward the red line under the right side, the angle is not increasing toward vertical, so it looks like a
time for plenty of caution. Despite all the happy talk.
So last, but not least, I applied the notion to a 4-month data set of Newmont Mining, as I am watching gold and mining companies closely. Unfortunately, in the case of NEW, there's nothing to note except that it has just turned up a bit on a cumulative basis. Is this the beginning of a new move up? We'll see...
If you'd like to tinker with it, click over to:
http://www.urbansurvival.com/inside/scurves.xls
On to the charts!
New Year's Present:
A 2002 Web Bot Forecast
The folks at the think tank have been doing an incredible job this year of providing insights - and useful forecasts about what is to come. As a present to readers, here's their insight. (This will be put up on the "public" side of Urban Survival on New Year's day - this is a special "advance" reading for subscribers.)
Felt the need to close out the year with the same sort of view given
by the model in July. Have put together a grouping of model output
on some of the larger questions. I was able to increase the number
of inputs for the entities by collecting data over the week and
treating it as a single processing with time shading. However, this
must still be considered a 'light' model in that it is still less than a
third as dense as our July product. That said, here goes:
Any element found in square brackets [ ] is an entity providing the
attributes which are used for the interpretation surrounding it.
Where is bin Ladin? And more to the point, the real evil genius of
Ayman Al-Zawahari?
Well, the model says that the entity [enemies] dispersed with the
coming of the snows. That the exit was mostly as single individuals
through prepared routes. That [documents] previously prepared
were used in the dispersion. That routes of this dispersal included
two main paths. One to the West, one to the Northwest.
The route west was to reach Iran, then south to the sea. The route
Northwest was to reach Uzbek or Turkmenistan. From there, east
toward Kashmir, and then the [Middle Way] (note this interpreted as
a route through between China and India). The entities note also
that in order to take this route, the [enemies] had to face the idea of
surrendering their weapons. They did so as the situation itself
promised success for their dispersal and so resorting to weapons
was not going to be required.
The entities also show attributes that one might expect, such as
mountainous, cloud covered, icy, danger in the evening (satellites
perhaps?), metal (carrying its own attribute of danger so
presumably something like landmines? or other armaments?).
Also, the entities representing this dispersion of the [enemies]
suggest that written evidence of this plan is to be found at a place
known as "the announcing mouth". Which one might presume to be
a cave mouth, but my interpretation is more to the mouth of a
valley, where there is a {dry} river bed. But being that Afghanistan
is Muslim, perhaps there is a place known or seen as a minaret?
This valley opening points NW generally, and would seem to have
a reputation locally as a place where the 'river burst its dams in the
season of [cloudbursts] or floods'.
Curiously, the entities in the model are saying that some
"messages" are part of the dispersion of the [enemies]. These
"messages" are basically as follows:
"words above strength", and "notify one's own city", and "(do) not
resort to arms".
Please note that these messages are merely emotional qualifiers
taken in, not literal messages from the enemy, rather are how the
emotional readings of the net are re-converted back to a lexicon
and interpreted. Sort of a sampling or polling of the subconscious
mind of those persons expressing themselves on the internet. So
one real solid interpretation of the "messages" is that this is what
has been perceived as the core emotional message of the recent
events. While the first is really open to interpretation, the latter two
are associated with fear for personal safety.
Now, some specifics. The 'chatter' from the entities which is always
the least reliable of their attributes suggests that bin Ladin has
'disguised' his 'cheekbones'. It further suggests that Ayman al-
Zawahari went west to Iran, and from there towards the sea, and
that bin Ladin went Northwest disguised as a Northerner
(?Uzbek?Turkomen? Russian?) before doubling back toward
Kashmir and then to Burma/Thailand (specifically interpreted due to
many references to Temples appearing for the first time as
attributes). The entities specifically refer to many small parties and
individuals leaving separately, so presumably this means that all
the leadership guys fled over the course of the last month.
The entities also suggest that the immediate goal of the dispersal is
to get to some boats. There are attributes of temples and ice and
rigidity involved with the passage of time. I choose to interpret this
as a leaning toward travel associated with the Himalayas and
perhaps the southern most border of China or travel along the
northern most border of India.
Of course, in the mind of the [enemies], the point of the dispersal is
really the [regrouping]. This entity shows attributes of wind over
water, more temples, and a large expanse of water (the southern
ocean), warmth, the rainy season (monsoons), cloudbursts, clouds
hovering halfway up a mountain, and density of life. Due to the July
model's accuracy of the prediction of Philippine involvement, and
due to the knowledge that bin Ladin sent one of his sons there prior
to the attack, I am interpreting these entities and attributes to
suggest that the goal of the dispersion is to re-unite on one of the
southern islands of the Philippines. The entities suggest that the
place chosen for the re-uniting is the 'king in the middle'. This is an
unknown reference, but perhaps it refers to a specific place name
as a translation or a local description. In any event, this is the
description coming out of these entities.
One last point. Please remember that the Bots earlier said that Bin
Ladin was dead. That may well be the case as the entities
represent the enemies in a general sense rather than specific
individuals. Though, of course, we will pick up the 'chatter' which
references individuals. Personally, I find entities composed of
personal references to be the least reliable prognosticators in the
model. So these references to specific people are most likely to be
failures over time.
-----------
As to things financial, the model suggests the coming of some
pretty monumental events. In fact, a conflict has begun between a
strong and a weak entity that the model says will move ALL
markets over the next two weeks. Bear in mind our timing
interpretation sucks so could be 2 weeks to 2 months away. But
not much longer than that in that the timing indicators all are
shading toward immediate or very short term.
The strong entity is termed [the community] as this is apparently
how the members of this grouping conceive of their association to
the group. Interpretations of this entity rightly suggest that it
represents the 'alignment of interests' which bind the establishment
of the financial 'community' of the planet. This entity represents to
the financial interests, what incumbency might represent to the
political interests. In that sense, the entity thinks of it self as, and
tends to express this, the 'establishment'.
The weak entity is the [contender] as in one who would begin a
quarrel. This entity has an amazing array of positively associated
attributes which would lend the interpretation of a champion as in
one who would stand for others. Some of the positive attributes
include a strength of conviction, nourished on virtue, allegiance to
ancient virtue, perseverance through correctness, and the like.
The model is pointing to a battle that was recently begun The
conflict between our two entities here does NOT refer to the current
war on terrorism (I think) as these both are restricted to the
financial realm and are both well centered within the financial
processing programs of the model. These entities have already
begun their conflict.
The [contender] is below and [the community] is above. While [the
community] is a very strong entity, it nonetheless is currently
expressing impotence as its strength cannot be used in the current
situation. In fact, [the community] is barely hiding fear over their
position. Their view of the [contender] below them is as one might
view a danger, but with the peculiar nuance of a danger occupying
a correct position. In other words, it is as though a burglar viewing a
guard dog who has him trapped in the rafters, unable to move,
frustrated, scared, yet acknowledging internally that the guard dog
is very good at his work and is being correct in all its moves.
Now, in the drama to emerge over the next short period, and which
will move ALL the markets over this period, an [official] will arise.
This entity is smack in the middle of our conflict, and from its
associations, I interpret to represent a judge of some form. This
entity as it has developed is clearly not representing the executive
branch of things, but more of an official nature, suggesting either a
real judiciary member or perhaps some regulatory official in
government with the power to decide disputes. What is clear is that
[the community] finds itself in a very delicate and potentially
hamstrung position. The entities suggest that the markets of the
next weeks will be moved by the actions of this [official] in relation
to this conflict. They further show that [the community] recognizes
the virtue of the character of the [official], his clarity of vision, and
the nature of his respect for order. They are also aware of both his
knowledge and personal strength of will. They see this [official] as
the gate that represents either success or destruction. There is fear
associated here as interpretations suggest [the community] is
aware that the [contender] strives on the part of correctness and
will be favored in that righteousness by the [official].
So as the conflict is now shaping up, a [vessel] (corporation?)
associated with the organization of the clans (drawing together
groups with a common bond) will be the visible point of contention
over the next period. The [contender] has (will make) a correct
move. The [official] will favor that move, and as a result, [the
community] will be placed at risk.
[the community] will respond by placing a high hill as a block to
delay their exposure. In the mean time, they debate internally about
the use of their hidden weapons. They recognize that they have a
hard man as an opponent and that his perseverance is evident in
the 3 years it has taken for him to reach this stage of the conflict.
They also see the conflict starting to rise in visibility. This is
threatening as their weapons only work if hidden. [the community]
is even now trying to prevent this rising to view of the conflict. It
finds that it cannot use it's strength(s) without betraying its position.
[the community] is stymied by the correctness of the [contender]'s
position. [the community] is only able to "peep out" at its opponent
but dare not come forth.
This is the beginning of a 3 year period of general destruction for
the community. The model is suggesting that the [official] will stand
for the correct position and that this will be the end for [the
community]. The model further suggests that ruin will be clearly
visible and in place by mid-summer. It shows the [contender]
arising from the west of [the community] and that the initial
confrontation or opening in the conflict has already occurred.
An attribute of [the community] is a developing coming out into the
open. This is not viewed as a good thing by the entity as there is
much trepidation associated internally with this attribute. The
response being prepared is to show that [the community] stands for
the collective flow, is beneficial for social aims, and it will promise
success. There will also be a move to promulgate a 'new endeavor'
as a distraction to the emerging of [the community] into the open.
A note on interpretation:
There is much more information but basically repetitious and all to
the same theme. While the above could show some elements of
actual conflict and might well be trying to indicate to my dense
brain an impending attack by the Wahabiites, I am choosing the
interpretation which is more focused on the financial side of things
as these entities are reasonably clear about that. That preface
made, while it is easily possible to interpret the above as relating to
all sorts of developing nasties from Argentina to Turkey, from
Enron to FuneralGate, my personal view is that the entities are
describing the current and pending situation of the GATA suit. This
fits so well that I am blinded to any other interpretation. But, I have
been and am frequently wrong about these entities once I stop
reporting on them and try to position the interpretation onto current
events. So this is by way of a disclaimer of a sort. The interpretation
stands, and if correct we will see an event within the next 2 weeks
to 2 months (though I favor 2 weeks) which will be shown to have
caused a huge financial problem likened to destruction fully
underway by mid-summer but which will take the better part of 3
years to run its course.
Now, on that 'happy' note, let us also remember that the model is
showing that the correctness of the [contender]'s position is what
gets the [official] to side with him. If that is really proven by time to
be the case, then the outcome would have been inevitable as
nothing so incorrect can endure. Reality, in case one missed it, is a
self correcting mechanism which does not tolerate extremes to
exist but momentarily.
Bona fortuna ad omnes in nova annum.
From the Poop Deck:
Transportation: This was the week when everything I touched with regard to transportation glitched out on me. First off, the (up until now) totally reliable Porsche lost its mind. The DME computer went out. It did so when the car with Elaine and I were 53 miles east of San Diego in the hills, which meant a $175 tow back to the parking lot at our marina, while we waited for last weekend to get over with. Then another $36 dollar tow to Dieter's Porsche. Took them $600 to discover the DME problem (along with replace some questionable sensors) and by the time that was done, they didn't put in a new DME - they just lent me one from another 944 because if they di9d the DME it would be about $1,300. So I picked up a used one for a mere $700 from www.vertexauto.com, but I will get $150 back when I return the old core (brain-dead one) to them. OK: tough enough on unemployment. But wait, it gets better. I then was riding the bike down to the Von's to pick up another load of steaks and beer and while driving Panama's Mongoose 21-speed mountain bike, I hit a driveway at two shallow an angle and went ass-over-teakettle at 15 miles an hour. Ouch is the nice word. There were many others (not so nice). So how could it get worse? Well, I got up the next morning and said "Hell, no one is going to hire me on Christmas so I think I will go fishing. Got out in the Zodiac, only to discover that the water pump on the 15-horse Mariner outboard has chosen this week to fritz up. So this is not the week for me to even get near transportation. God forbid if I had to go anywhere this week on an airplane! Food: Cheap food of the week? Cole Slaw bagged and cleaned for 8.1 cents an ounce. Fried cabbage and ham today...maybe with an egg. Sounds ghastly, but gotta try it. Pizza last night was good, although I discovered as I was eagle-eyeing my way around the store that you can buy a generic pizza for about $3.50 and a "designer" pizza for $7.00 and they look suspiciously similar. Extra cheese is 14-cents an ounce in bulk and 31-cents an ounce if you pay someone to shred it for you. I'll shred stuff all day for 15-cents an ounce...Shelter: Thinking about writing a book on apartment management. It would be a really useful thing for a lot of young couples to learn about as you can live much cheaper as a manager than trying to work and save money to buy a home. Input on this requested. Meantime, I have gotten all the reader-volunteers to read my new book which should go out to test readers at the end of January. Thank to everyone who sent in. Communication: Telemarketing calls made me put up a sticky note to tell you make sure when you get telemarketing calls to tell them to take me off your list". Otherwise they keep calling. Environment: More discussion among global weather whizzes that the side effect of global warming is more extreme weather. Ask anyone in Buffalo. Think Tank reports the Weather Service thinks the Northwest will get a major cold-streak next. Finance: Does anyone really expect the market to be higher at the end of January 2002 than at the beginning? Energy: I think gas prices are at or really close to their bottom. If you have a gas guzzler, over the next month or two, the price will probably be as good as you will see for a while, and the zero interest stuff at car dealers is running out shortly...
Well, there you have it: Another week. I've been working on Elaine to do a regular column because she has some very interesting points of view. Maybe I can talk her into doing that...or maybe you could.
Thanks for subscribing...One last thing: I'd appreciate it if you would pass along subscription information to a friend or two (assuming you find these
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the time the sun burns out, the entire population of Wyoming will be subscribing.
Happy New Year and best wishes for health and prosperity beyond measure in 2002.